JAMESON RESOURCES LIMITED — Capital/Financing Update 2013

Apr 16, 2013

17 April 2013

Fast Facts ASX: JAL

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|---|---|
|Share Price Range (6mths)|$0.21 ‐ $0.36|
|Shares on issue|157,867,009|
|Options ($0.15 ‐ $0.35)|9,325,000|
|Market Capitalisation|~$49M|
|Cash Position (Mar 31, 2013)|~$3.8M|
|Major Shareholders|
|(as at April 2013)|
|Macquarie Bank|9.6%|
|Nefco Nom PL|6.4%|

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Directors & Management

David Fawcett (Chairman) John Holmes (Managing Director) Art Palm (Executive Director – Operations) David Prentice (Non Executive Director) Jeff Bennett (Non Executive Director)

Key Projects

Crown Mountain Coal Project, 90% Elk Valley Coalfields, Canada Dunlevy Coal Project, 100% Peace River Coal Fields, Canada

Investment Highlights

• Positioned in world class metallurgical coalfields

• Significant development expertise on board with successful track record

• Modern rail and port facilities

• Strong financial position

Newsflow / Catalysts

Dunlevy regulatory approvals Q2 2013 Dunlevy exploration commences Q2 2013 Crown exploration commences Q2 2013

Contact Details

Australia

L2, 79 Hay Street, Subiaco WA, 6008 P +61 (8) 9200 4473 F +61 (8) 9200 4463 E admin@jamesonresources.com .au Canada

S8, 1199 West Hastings, Vancouver P + 1 (604) 629‐8605

PEA Confirms Potential Robust Economics on Crown Mountain Coal Project

Highlights

• Indicative pre‐tax NPV10 of US$845M, US$544M and US$233M at 60%, 50% and 40% plant yields respectively

• Mine plan encompasses 76M tonnes (84% conversion) of the 90M tonne resource, which supports a potential mine life of 24 years at 1.3 to 1.9Mtpa

• Low overall average raw coal stripping ratio of 4.3:1 (BCM:t) relative to other surface coking coal projects in the region

• Approximately 90% of clean coal production is expected to be of a metallurgical quality similar to the coking coals shipped from the Elk Valley

• Capital expenditure is estimated at between $109.7 million to $283.9 million, depending on various leasing scenarios

• Mining, processing and transport costs (including sustaining capital) estimated at $108/tonne, $120/tonne and $139/tonne at 60%, 50% and 40% yields respectively

• Exploration activities including bulk sampling are scheduled to commence late Q2 2013 subject to regulatory approvals

Jameson Resources Limited (“Jameson” or “the Company”) is pleased to report the completion of the Preliminary Economic Assessment (“PEA”) for its Crown Mountain coal project (“Crown Mountain” or “the Project”). The results show potential robust economics for a low cost metallurgical coal mining operation.

Commenting on the PEA the Company’s Managing Director, Mr John Holmes said;

“We are very pleased with the results of the preliminary economic study which clearly highlight the development potential of the project. The Company is looking forward to undertaking further exploration before advancing the project through to a prefeasibility stage of development”

www.jamesonresources.com.au

ASX RELEASE Introduction

Jameson Resources Limited is pleased to report the completion of the Preliminary Economic Assessment (“PEA”) for its Crown Mountain Coal Project in British Columbia, Canada. The PEA was managed by Norwest Corporation (“Norwest”) of Calgary, Alberta, an independent contractor, in accordance with CIM Standards as is required by National Instrument 43‐101 (“NI43‐101”).

The PEA was authorised by Jameson after Norwest released Crown Mountain’s maiden resource of 90M tonnes (66M Measured & Indicated and 24M Inferred) in February this year.

CROWN MOUNTAIN	Measured (Mt)	Indicated (Mt)	Measured & Indicated (Mt)	Inferred (Mt)
North Block	7.9	7.1	15.0	0.0
South Block	51.3	0.0	51.3	0.0
Southern Extension	0.0	0.0	0.0	23.7
TOTAL	59.2Mt	7.1Mt	66.3Mt	23.7Mt

Table 1 – Classification of Resources – Crown Mountain Project (effective 21 January 2013)

The PEA has identified several of the operating parameters at Crown Mountain. There remain, however, certain risks in the project, which have been summarised as an appendix to this announcement. The following assumptions form the basis for the PEA:

Preliminary Economic Assessment ‐ Parameters	Preliminary Economic Assessment ‐ Parameters
Mine Life	Through to exhaustion of economic resources
Clean Coal Production Rate	At least 1.0 million tonnes per annum (Mtpa)
Plant Yield	Varying within a range of 40 to 60%
Coal Price ‐ Hard Coking Coal (“HCC”)	US$202.97/tonne
Coal Price ‐ Pulverised Coal Injection (“PCI”)	US$141.58/tonne
Coal Price ‐ Thermal	US$108.91/tonne
Shipping Port	Westshore Terminals(+ sensitivity to alternate Ridley Terminals)
Capital	All start‐up and equipment costs capitalised

Table 2 ‐ Preliminary Economic Assessment Parameters

Note ‐ The coal pricing assumptions and marketing review for the PEA was prepared by an independent marketing consultant, Koornhof Associates Inc. of Vancouver, British Columbia, a subcontractor to Norwest.

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All costs discussed in the report are in US and Canadian dollars. For the purposes of the PEA, Norwest ASX RELEASE has assumed a CAD:USD exchange rate of 1.00. Whilst this is in‐line with the current spot foreign exchange rate, should the exchange rate lower to consensus long term forecasts, the economics of Crown Mountain should be significantly enhanced. Based on assumptions employed by Norwest in the PEA, the clean coal product mix is estimated as follows:

Metallurgical coal	89.87%
PCI coal	6.35%
Thermal coal	3.78%

As reported by the Company in February 2013, Norwest completed a NI43‐101 compliant resource estimate for Crown Mountain and expressed the opinion that the majority of Crown Mountain coal is expected to be hard coking coal similar to that shipped from neighbouring mines. Norwest also identified the need to perform additional exploration, including bulk sampling, before definitive clean coal quality (and plant yield) can be determined. Since the Crown Mountain seams appear to have more non‐separable partings than nearby mines, plant yield may be below the prevailing yields of 60 to 70 % in the Elk Valley.

The assumptions made by Norwest in the PEA are subject to change once additional exploration is completed and laboratory results evaluated. Jameson expects this information to become available following the exploration activities which are scheduled to commence in late Q2 2013.

Mining and Processing

The mining method selected for Crown Mountain in the PEA is open pit. Mining equipment includes excavators, front end loaders, and haul trucks, supported by dozers, backhoes, and blasthole drills.

As with all Canadian metallurgical coals, a wash plant is required. The PEA locates the plant proximate to the mine site. This accomplishes multiple goals: (a) it reduces trucking costs for the (run‐of‐mine) ROM material, (b) it allows plant reject disposal to occur at or near the mine site, and (c) the opportunity exists to evaluate using the fine plant reject (slurry) to contain coarser reject and some mine spoil with the potential to significantly mitigate any water quality issues. As plant yield has yet to be determined, the PEA sizes the plant to process approximately 3.2Mtpa of ROM per year, which results in the production of 1.3Mtpa to 1.9Mtpa of clean coal per year (based on a yield range of 40% to 60%).

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Washed coal would then be trucked approximately 14 km to a stockpile/loadout area where the product ASX RELEASE would ultimately be loaded onto railcars on a new sidetrack to be located parallel to Canadian Pacific’s existing common‐user railway. The loadout facility includes silo storage and a bulk loading system.

Transport

Once loaded onto rail, it has been assumed railway carrier Canadian Pacific (“CP”) will transport the coal to Westshore Terminals (“Westshore”) near Vancouver, a distance of 1,000km, where it would be loaded into ships. Westshore is the terminal of choice for Crown Mountain coal, with an estimated transportation cost (combined rail and port) of $40/tonne.

Expansions are currently underway at the two main Vancouver ports (Westshore and Neptune) and it is believed Westshore will have available capacity when first coal from Crown Mountain is available to be shipped.

As an alternative, Norwest also evaluated financial performance for shipping the longer distance to Ridley Terminals (at a combined $60/tonne transportation cost). With two rail carriers involved (CP and Canadian National) additional costs have been included for interchange. There are no capacity constraints with either of the railway carriers.

All clean coal production from Crown Mountain (coking, PCI, thermal) is assumed to be exported.

Preliminary Economic Assessment

The mine plan developed by Norwest encompasses 76M tonnes of the 90M tonne resource equating to approximately 84% of the resource base. The life‐of‐mine (LOM) is estimated at 24 years, with annual clean coal sales ranging from 1.3 to 1.9Mtpa based on plant yields varying between 40 and 60 %, resulting in LOM sales ranging from 30 to 45M clean tonnes.

The overall average raw coal stripping ratio is 4.3:1 (BCM of waste to tonne of raw coal). This is considered to be low and attractive relative to other surface coking coal projects. The low strip ratio is due to Crown Mountain’s topography and the presence of seven major coal seams near surface.

Primary outputs from the PEA are listed in the Table 3. Norwest also evaluated alternate scenarios which consider leasing all mobile equipment and leasing the plant and operating it on a contract basis which would significantly reduce start‐up capital.

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ELEASE Plant Yield	Strip Ratio (Raw)	Strip Ratio (Clean)	Clean Coal Production Mtpa	FOB US$/tonne	IRR %	NPV10 US$M
40%	4.3	10.77	1.263	$138.91	20.52	$232.5
50%	4.3	8.61	1.578	$120.07	31.66	$543.5
60%	4.3	7.18	1.894	$107.51	41.11	$845.4

Table 3 ‐ Preliminary Economic Assessment (Pre‐Tax Basis)

Note – The outputs from the PEA do not include taxes and royalties. The royalty (British Columbia Mineral Tax) is a two part royalty payment to the provincial government. The first part being 2% of annual revenue from coal sales less operating costs, and the second part requiring a payment of 13% of net revenue once all initial capital, a new mine allowance and a return on investment has been recovered.

Capital and Operating Costs

The mine operating cost estimate has been developed from first principles and considers all aspects of the mining operation, including coal processing, coal and waste loading and haulage, topsoil salvage and replacement, road maintenance, water management, reclamation and site administration. Norwest included a 10% contingency to the total operating cost estimate. Operating costs are summarised in Table 4.

Cost Category	Cost per Clean Tonne (40%yield)	Cost per Clean Tonne (50%yield)	Cost per Clean Tonne (60%yield)
Mining	$70.92	$57.59	$48.71
Processing	$11.08	$8.86	$7.38
SustainingCapital(Overhauls,etc)	$7.93	$6.34	$5.28
Contingency (10%)	$8.99	$7.28	$6.14
Total Costs ‐ Site	$98.91	$80.07	$67.51
Rail and Port Costs	$40.00	$40.00	$40.00
Total Costs ‐ FOB(pre‐tax and royalty)	$138.91	$120.07	$107.51

Table 4 – Operating Costs

Start‐up capital expenditure to support a 3.2Mtpa mining and processing operation has been estimated by Norwest to be $283.9 million as detailed in Table 5. The use of leasing has the potential to significantly reduce this up‐front capital investment to as low as $109.7 million.

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ASX R	ELEASE Pre‐Production Capital
	Major Mobile Equipment	$92,450,000
	Minor Mobile Equipment	$7,910,000
	Wash Plant	$65,900,000
	Infrastructure (rail load‐out, roads, power, offices, shop etc)	$63,440,000
	Pre‐Strip	$28,354,000
	SUBTOTAL – CAPITAL	$258,053,000
	Contingency @ 10%	$25,806,000
	TOTAL CAPITAL	$283,859,000

Table 5 – Pre‐Production Capital

Alternate financing scenarios have also been examined by Norwest designed to reduce start‐up capital whilst preserving the overall performance of the project.

It is possible, indeed common, to lease mobile equipment rather than expend capital. Although less common, it is also possible to utilise a third‐party to construct and operate the wash plant, again saving up‐front capital. Norwest examined each of these options:

1. Leasing Mobile Equipment:

2. a. If all the major mining equipment is leased, start‐up capital is reduced by $101.7 million.

3. b. IRR of the project increases by 3.6% to 7.6% over the range of plant yields examined.

4. c. NPV10 increases by approximately $21 ‐ $29 million varying with yield.

5. Leasing/contracting wash plant:

6. a. Removing the wash plant from capital saves $72.5 million (including contingency).

7. b. IRR increases 1.8% to 9.1% over the range of plant yields examined.

8. c. NPV declines slightly (between $8 ‐ $16 million) due to higher operating costs.

As can be seen from above, the potential exists to significantly reduce up‐front capital requirements while at the same time improving project economics. Taking the above two alternatives combined, there is a reduction of start‐up capital totalling $174.2 million, resulting in an up‐front capital requirement of $109.7 million to bring the project into operation.

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Next Steps

ASX RELEASE Next Steps

The Crown Mountain project has a very low raw coal stripping ratio and is expected to produce predominantly coking coal generating favourable economics. Jameson has planned a summer exploration program to determine coal quality and plant yield. The Company has submitted a Notice of Work (“NOW”) to the British Columbia Ministry of Energy and Mines to undertake an additional phase of drilling and coal quality testing.

The exploration program will include large diameter diamond core for the collection of bulk samples. In addition, the NOW includes a number of reverse circulation drill holes designed to (a) upgrade a proportion of the Southern Extension resource from Inferred category to Measured and Indicated, and (b) to delineate a possible modest expansion of resources in the North and South blocks.

Subject to the approval of the NOW and weather conditions, exploration activities are expected to commence late Q2 2013. The Company intends to move towards a Prefeasibility Study in Q4 2013 should the results of the planned exploration program be favourable.

On Behalf of the Board of Directors,

John Holmes

Managing Director

About Jameson Resources Limited

Jameson Resources Limited (ASX:JAL) is a junior resources company focused on the acquisition, exploration and development of strategic coal projects in western Canada. The Company has a 90% interest in the Crown Mountain coal project, and a 100% interest in the Peace River coal projects including the Dunlevy located in British Columbia.

Whilst Crown Mountain is the more advanced project in the Company’s tenement portfolio, an independent geological evaluation states that a conservative Exploration Target of at least 100 to 150 million tonnes of potential metallurgical coal could be defined within the Dunlevy project. Dunlevy is located along strike from several metallurgical coal operations in the Peace River coal field. The Company is keen to commence exploration drilling at Dunlevy on receipt of regulatory approvals.

Jameson’s tenement portfolio in British Columbia is positioned in coalfields responsible for the majority of Canada’s metallurgical coal exports and are all close to railways connecting to export facilities.

To learn more, please contact the Company at +61 89200 4473 visit: www.jamesonresources.com.au

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ASX RELEASE

Figure 1 : Project Location Plan

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Figure 2 : Crown Mountain Summary Plan

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PEA Study Parameters ASX RELEASE

The purpose of the PEA was to evaluate the commercial potential of the project, and included the following major steps:

• Develop a mine plan for the resource, based on incremental breakeven analysis.

• Estimate capital and operating costs (on a ROM basis) for a production rate of at least 1.0Mtpa clean tonnes of coal.

• Determine project economics (IRR and NPV10) over a range of potential plant yields.

• Perform sensitivity analysis on several major parameters, including shipping port, coal sales price, operating cost, and capital cost.

Key Risks

The PEA, and its predecessor Resource Report, have identified several of the operating parameters at Crown Mountain. There remain, however, certain risks in the project, which include:

• Market Risk : While the Norwest economics are based on pricing forecasts from reputable and respected sources, there is no guarantee these forecasts will prove accurate.

• Coal Quality : As has been stated previously, a definitive understanding of coal quality at Crown Mountain is dependent upon further exploration, including the collection and analysis of bulk samples. Jameson intends to conduct the required work this summer.

• Plant Yield : As with coal quality, plant yield has not yet been defined. Project economics are highly sensitive to plant yield. While the range of yield examined in the PEA, 40‐60 percent, is believed to be reasonable, there is no guarantee actual yield will fall into this range. The proposed summer drilling program is designed to evaluate what plant yields can be expected.

• Environmental : Any mining operation must be engineered and operated to meet existing environmental standards, including but not limited to air and water quality. While the summer exploration program will collect additional data on critical environmental parameters (ie: selenium, ARD, etc) Jameson is not in a position at this time to accurately determine the cost of environmental compliance, or the government’s reaction to what environmental and mining permits Jameson may in the future submit.

• Port : At this time, it appears likely that port capacity will exist once Crown Mountain commences operation. However, there are several other coal projects under evaluation in western Canada which also contemplate export. Jameson does not at this time hold a contract for port capacity (a topic that will be considered should a positive PFS occur).

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ASX RELEASE Competent Person Statement

The information in this document that relates to the yet to be completed preliminary economic assessment is based on information compiled by Mr. Keith Wilson P. Eng., who is a Member of a Recognised Overseas Professional Organisation (ROPO) included in a list promulgated by the ASX from time to time, being the Association of Professional Engineers and Geoscientists of British Columbia. Mr. Wilson is an Independent Consultant [OR/ an employee of Norwest Corporation] and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Wilson consents to the inclusion in the document of the matters based on his information in the form and context in which it appears.

The information in this document that relates to the Mineral Resources is based on information compiled by Mr. Geoff Jordan P.Geo., who is a Member of a Recognised Overseas Professional Organisation (ROPO) included in a list promulgated by the ASX from time to time, being the Association of Professional Engineers and Geoscientists of British Columbia. Mr. Jordan is an Independent Consultant [OR/ an employee of Norwest Corporation] and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Jordan consents to the inclusion in the document of the matters based on his information in the form and context in which it appears.

The information pertaining to the ASX Announcement to which this statement is attached that relates to exploration results is based on information compiled by Mr John Holmes, who is a member of the Australian Institute of Geoscientists. Mr. Holmes is a full time employee of Jameson Resources Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr. Holmes consents to the inclusion in the ASX Announcement of the matters based on his information in the form and context in which it appears.

Forward Looking Statements

This announcement contains “forward‐looking statements”. Such forward‐looking statements include, without limitation: estimates of future earnings, the sensitivity of earnings to commodity prices and foreign exchange rate movements; estimates of future production and sales; estimates of future cash flows, the sensitivity of cash flows to commodity prices and foreign exchange rate movements; statements regarding future debt repayments; estimates of future capital expenditures; estimates of resources and statements regarding future exploration results; and where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward‐looking statements. Such risks include, but are not limited to commodity price volatility, currency fluctuations, increased production costs and variances in resource or reserve rates from those assumed in the company’s plans, as well as political and operational risks in the countries and states in which we operate or sell product to, and governmental regulation and judicial outcomes. For a more detailed discussion of such risks and other factors, see the Company’s Annual Reports, as well as the Company’s other filings. The Company does not undertake any obligation to release publicly any revisions to any “forward looking statement” to reflect events or circumstances after the date of this release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

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